When it comes to technical analysis, two valuable tools that stand out are the TRIX (Triple Exponential Average) and TEMA (Triple Exponential Moving Average) indicators.
These indicators are based on exponential moving averages (EMAs), but they have different calculations and interpretations, which provide traders with unique insights into the market.
Let’s take a closer look at how these indicators work.
TRIX
To calculate TRIX, it considers the percentage rate of change of a triple EMA. This helps smooth out the price data and assess the rate of change over a specified period.
TEMA
On the other hand, TEMA applies a triple EMA using a different method. It involves a series of EMA calculations designed to reduce lag and offer a smoother moving average.
Now, let’s understand how these indicators are interpreted.
TRIX
This indicator focuses on identifying trends, momentum, and reversals. It generates signals through crossovers with a signal line and identifies divergences between the TRIX line and price.
TEMA
The primary objective of TEMA is to provide a smoother and more responsive moving average. It helps identify trends and pinpoint potential entry or exit points based on price crossovers and the slope of the TEMA line.
In summary, the TRIX indicator emphasizes the identification of trends, momentum analysis, and divergences. On the other hand, the TEMA indicator aims to offer a smoother and more responsive moving average. Traders can choose the indicator that aligns with their specific strategies and preferences.